Today’s trade has been one of bullish trending action for both bonds and stocks. Stocks are higher on good earnings expectations and some positive movement on the Greek debt crisis. Word has it that EU/IMF has a plan for 40 to 61 billion EU on a three year loan at 5.0%. Trouble is that it would address their liquidity issues but not their solvency. Treasuries and mortgage backs continue to grind higher (lower yields) due to tactical reallocations and sellers that appear to be “worn out”.

One word of caution as you look at the chart. Currently, we’re right up against the top of the range (116 10 in futures and 3.83% 10 year note yield). For the market to do better (Austin mortgage pricing improvement), we need to breach and close above 116 10 (below 3.83% yield). Otherwise, all that has happened is that we’re tested the top of the range and we’ll once again consolidate, moving back towards the center of the range. Traders like the set up and prefer to short (sell) the market at this level with tight stops. Meaning that if their wrong, they will know quickly and will get out with small losses.

The economic calendar heats up as well this week. Housing data tomorrow, inflation and Retail Sales on Wednesday, housing, inflation, and Weekly Claims Thursday, and Michigan Sentiment Survey on Friday.